Category Archives: media buying

How free video uploads will drive down CPMs

2009 will be remembered as the year online video arrived, and it will force media moguls to drastically reduce the prices for ad inventory. You see, Apple unveiled its latest iPhone Monday with video-recording capability, making it easier than ever for consumers to upload movies. On the receiving end, Cisco expects online video streaming to quintuple internet traffic over the next few years. Put it together and consumers will capture content, share content, and then watch it, making all the ad space that used to fund professional media production worth less.

So far marketers, still shocked by recession, aren’t flocking to media buying opportunities. Nielsen just reported that U.S. ad spending fell by $3.8 billion, or 12%, to $27.9 billion in Q1. Marketers are retrenching in part because consumers are not buying as much stuff in this down economy; but marketers are also getting smarter with their investments, and they are not putting ad dollars in media vehicles where they cannot measure ROI.

Total ad spending doesn’t tell the whole story. Fewer ad dollars don’t necessarily mean fewer ads — just less bloated spending for Super Bowl broadcasts. The real tale is one of commoditization — advertising is becoming another product that is valued less by society. For instance, Adweek editor Brian Morrissey points out standardized web banner ads are ignored by consumers, forcing online marketers to either use ever-more intrusive formats or to fall back to performance-based, cost-per-click type buys.

So the price of advertising will begin to fall

What happens when your product becomes less wanted and your shelves are filled with it? Why, you have to lower prices. The supply of ad inventory is increasing, as slots become available on millions of blogs, within social media, even tied to Tweets. At the same time, consumers demand less advertising as it is deemed irrelevant to the content they wish to share. The trend is visible already both in traditional media (radio networks seeing falling ratings are being forced to reduce rates) and online (as ad networks offer CPMs in the $2 range).

More ad space. Less demand. Lower prices. There’s an opportunity coming to advertising as new bargains emerge; the question is, as advertising becomes more challenging, do you have the right systems in place to measure what really works?

Writers’ strike may shift ad dollars to cable

Cable is looking better for media buyers as the writer’s strike enters its fourth week. Adweek reports that while networks have enough fresh episodes to last through February sweeps, marketers are getting nervous that prime-time ratings will fall as the source of its content dries up this spring. The thinking goes cable has great original content and series (such as The Sopranos) that can be replayed, pulling audiences off of the broadcast nets.

The broadcast season started off in a bad slump, with ratings down about 12 percent — even with original episodes on the air — in the first four weeks. If broadcast networks lose more steam, advertisers will want out, and the media planning chaos could cascade into demands for cash back and severe skepticism about the next 2008-09 season. Check out Adweek’s analysis here.

Answer one question to solve advertising math

We’re constantly amazed by the number of marketers who get hung up on media math. Of course, it’s complicated, with every media channel talking about different metrics — Gross Rating Points (% reach x frequency), CPM (cost per mil, or thousand impressions), DEC, and those lovely new web figures, cost per click, conversion rates, etc. Here’s a little secret: media channels use different metrics because they like to use the ones that make their channel look better than the other options.

So: How about cost per acquisition? It’s simple. How much are you willing to spend to bring in one incremental customer?

You should be able to answer this, and then pass it to your ad agency or media planners, and hold them accountable. If one customer generates $1,000 in revenue and $300 in profit in the first year, you may be willing to spend, say, $400 to bring in a new customer (since more profit will flow in future years, and you need to replenish your base). That’s your target cost per acquisition.

So, you have $400 in funds to bring in a customer.

If half goes to sales, then you have $200 to spend on marketing for each new customer.

And if only 1 in 4 customers is sold, you have $50 to spend for each lead (or inquiry).

$50. That’s it. All of your media needs to drive a phone call or web lead form for $50 per inquiry. How’s your direct mail doing? If it costs 50 cents per piece, you’ll need a 1% response rate to get to a $50 call. How’s newsprint? If one ad costs $5,000, you need 100 calls from a single ad to get to a $50 call.

Now, you have a single, common benchmark for every aspect of the media. Those old GRPs and CPMs are fine for planning. But if you really want to measure performance, you need to track action, not impressions. Everything else is just Monopoly money.

Nielsen reports stormy weather for newsprint

Nielsen reported U.S. ad spending for the first six months of 07, and local newsprint took another hit — down -8.0% year over year. Internet ad spending was up 23.2% by comparison. Glossy mags and outdoor had modest gains.

What gives? Analyst John Dvorak writes local newspapers have asked for this punch because they are lazy. The typical small daily has original news on pages 1 and 3, and then pads the rest with AP wire reports.

Years ago, this lazy model worked. The wire services used to provide local papers with a wide range of stories that local editors could use to enliven their news mix. Over time, many newspaper owners saw the savings they could realize from loading up on wire stories while minimizing their original editorial content.

Once the Internet arrived, this model was dead, as the Net revealed that many newspapers weren’t actually contributing anything new or unique. The fact that people all over the country subscribe to the New York Times, rather than to a local paper, says it all.

Our bet is the big dailies and the tiny community weeklies will survive. It’s the mid-sized newspapers in the middle that have the most at risk. Advertisers who use measurement to track responses from daily newsprint ads don’t need to see the circ numbers (or “readership” claims) to make the call — if costs per inquiry continue to climb, they will put their funds into other, more economical media.

Commercials as content

Firebrand launches on Oct. 22, trying to make commercials as cool as MTV was back in the day by offering “commercial jockeys” playing the hippest ads after 11 p.m. on ION. Pop culture fans will also find Firebrand at its web site, or with downloads from iTunes.

The economics are also cool. Firebrand targets Gen Y-ers/Millennials who account for $200 billion in consumer spending each year, and about 40% of online purchases. This audience is spending less time with mass media, so Firebrand will reach them via late-night cable and internet and mobile and, they hope, twentysomethings passing the cool commercials on to all of their friends. The launch plan includes outreach to influential bloggers, who are now either writing up the business model or praising the press junket.

It’s a new point of entry for making your message go viral. Question is — is your ad cool enough?

How to advertise inside Facebook’s widgets

By now you’ve heard of Facebook, LinkedIn and MySpace, the little scrapbooks online that have become walled gardens for college students and business professionals riffing with each other.

You’ve also heard the buzz inside Facebook is about its mini-apps, little programs created by college kids that are wildly popular because
(a) developers can make money off any ad that runs in their widget and (b) Facebook users can now throw virtual food at each other. Some apps go viral, and when they do we’re talking millions of impressions.

So, you get it. Facebook hot. Demo hot. Widgets hot. Uga want ad for Facebook widget demo.

Here are four ways in.

1. Check out Lookery is an ad network that does nothing more that put your ad on thousands of Facebook widgets. Lookery hasn’t launched yet, but they’re taking names and the word in the press is they’re serious. Lookery claims they will be able to target specific demos.

2. Go directly to the hottest widgets with the best audiences. Likewise has 2.9 million users, Food Fight 2 million, HotList 1.6 million. They’ll take your money.

3. Narrow your target inside Facebook with Flyers Pro, which serves ads based on user profile keywords, workplace, relationship status, political views, or current education status. Flyers Pro moves from a CPM to CPC basis, which is important because click-through rates can be very low inside social networks. The targeting possibilities are almost trippy — you can reach female liberals who are college alumni and work at Google, if you were recruiting for Hillary Clinton’s online campaign staffers.

4. Continue a Google AdSense program, and pray the black box at Google deems your text ad relevant enough to push inside a widget. We love Google, but if you want shelf space inside Facebook, this format is more difficult to control.

Yeah, it’s all complicated. If your marketing boss wants an explanation, just say you want to put your banner ad inside other banner ads that are inside the web that is inside the web. Got it?

With mobile up, something’s got to give

Forecaster Jack Myers predicts newspaper ad spending will continue to decline by 2 to 4.5 percent per year, for the next three years, as mobile advertising more than doubles in 2008 to $1.1 billion. Ad spending in print is down as circs fall and readers move online. We recommend print in many campaigns, but coach clients to measure ad performance to keep a close read on what works and what doesn’t. In many ad campaigns, there is a 10 to 1 ratio in cost per inquiry from various print ads in different pubs. CPM analysis is no longer enough — marketers need to find ways to measure responses from each individual ad, given the importance of making print work in a declining readership market.

The new outdoor opportunity

Travel on our mind. We passed this groovy bus on the commute home tonight, and it spurred a thought — there’s a disconnect between some of the best outdoor ad media and where many profitable customers live. Clear Channel, for example, offers taxi media in 28 urban markets, and really cool bus wraps, and those funky signs at bus shelters … but wait. Do some of your affluent customers live in the suburbs?

Out of home media is missing a story here. More than 90 percent of U.S. travel occurs on highways, there are 3.9 million miles of highways far from urban centers, and 75 percent of all domestic goods are shipped by road. That’s a lot of big trucks rolling around consumers.

Put 2 and 2 together, and you’ll see a media market potential: Rolling billboards on 18 wheelers. Would take some careful logistics to build impressions, but imagine buying the media on 100 huge trucks 3M-wrapped with your outdoor promotion, rolling through rush hour traffic in routes that coincide with your market footprint, reaching business men and women as they drive into or out of the ‘burbs each day. Consumers might like looking at something other than grit on the back of those trucks. An innovative impression might break through. Cities and states might find new revenue streams to fix all those potholes and ailing bridges.

Sound loco? We know of companies that get 1 out of 7 of their leads off truck logos, and those are typically one-off impressions. That’s the problem with current truck ads — usually it’s a single blip, promoting the product within. If someone could buy into a network of trucks, all rolling over high-traffic routes in a target geo, the reach and frequency would … accelerate.

With that, tomorrow we’re hitting the road.

Showtime quadruples its audience

For a few days, anyway. Showtime grabs for audience share shift with a “free preview” weekend Sept. 28-Oct. 1, hoping to build its subscriber base (14.4 MM) at the expense of HBO (28.8 MM), where we all miss The Sopranos. Post reports the weekend giveaway will put Showtime temporarily in front of its largest every audience, 54 million U.S. homes. The preview includes four original series — Brotherhood, Californication, Dexter and Weeds — and discounted rates nearly 50% off from several major providers.